How the link between credit and economic growth has broken: Joseph Mason column

Joseph Mason: fiscal drag dangers

As I write this, Standard & Poor's has downgraded the US's debt rating and other countries' ratings may follow. Markets are facing meltdown. We may all know that the events are related to what the world has been through since 2007, but few understand the linkages involved.

In 2008–09, already over-extended sovereigns bailed out their banking sectors to avoid losses. The reasons are simple: banks are thought to intermediate high-asymmetric information assets – particularly small business loans –

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